hm. interesting

it was thursday. i had a revision class for my accounting test the next day and the class had been going well. our kind lecturer had been giving many clues and advice for the paper the next day. now for those who have non-financial brains, this isn't complicated at all, so don't be afraid to venture on.

Interest can mean one of two things. The way that we are most accustomed to using the word is for returns. If you invest R100 at an interest rate of 5% (if this is the case you should consider changing your bank) you will get R105 at the end of the year. This means you can finally buy that coke you were keen on without digging into you capital amount (the R100) ha ha! That's the first way of talking about interest.

The second way? ... interest can be spoken of in terms of ownership. If a holding company has a 57% interest in another company then it means that it owns 57% of it. Our accounting lecturer was kindly explaining to us the 50% 'benchmark' and then we worked though an example. She mentioned that the way that we know if one company is a subsidiary of another is to work out how much interest the one company has in another and if it's greater than 50% then any money invested in that asset would be termed 'investment in subsidiary'. If the interest was less than 50% then it would classify as a regular 'investment in financial assets' . And that was the moment that i probably should have left the venue. Aah. hindsight is a clear view!

6 minutes into the example i (being the attentive student that i am) worked out on the forlorn piece of paper in front of me that the interest (speaking returns now) amounted to a massive 68% on one of the firm's investments. At that point i not-so-cautiously put up my hand and smugly told the lecturer with the audience of approximately 400 people that that investment should be reclassified as 'investment in subsidiary' because it is showing returns of greater than 50%. !!!

i heard just enough sniggering to know that i was wrong on this one. badly wrong. (if you havent worked out how i was wrong then you weren't reading with your whole mind- if that is the case, get off google talk and try again). i was suddenly grateful that i had asked the question rather quietly and was sure that not everyone had heard me. It was one of those times when as you ask the question you know your answer... she was talking ownership when she explained the 50% benchmark. Not returns! You wally!

Unfortunately my lecturer has a microphone. Her voice is extremely audible- something i had always been very grateful for until now... She calmly explained to me that interest (returns) and interest (ownership) were two very different things. Now everyone was in the joke and i felt like calling myself 'brunt' for the rest of the day. And the eye-contact she maintained throughout her explanation was impeccable so that anyone wanting to see who had asked this ridiculous question was effortlessly findable. As if they wouldn't have known from the fact that I was the only tomato face sitting in the venue and from the fact that while all heads were able to tilt (or crane if you were in the front row looking backwards) mine had to remain forwards...

I normally enjoy limelight. Not this time. Hm. Interesting.